By Hassan Malik

Recent radical fluctuations in oil prices have left investors worldwide confused. There is no doubt that plummeting oil prices have left a scar on a lot of energy stocks in the small-cap field. Yet, to the advantages of investors, not all small-cap energy stocks are suffering. On the contrary, some are managing to thrive in this new price environment. For investors looking for potential great deals amongst fluctuating oil prices, the following small cap energy stocks could be worth investigating.

Oasis Petroleum Inc. (NYSE: OAS ): According to some analysts, the one area that can thrive under lower oil prices is the Bakken region. This is because the Bakken features prolific reserves while still maintaining relatively lower costs of production in terms of shale. This is where OAS has an advantage. OAS has increased its reserves in the Bakken drastically over the last couple of years via drilling and strategic acquisitions. Its current reserves are fairly oil rich, which should play into the advantage of the company when oil prices rebound. Recently, OAS has seen its share price plummet 75% and can now be bought for a P/E of 4. For such a low price, investors are getting a good producer of the region that also offers relatively low cost of production.

Ultra Petroleum Corp. (NYSE: UPL ): The majority of Ultra’s assets are dry gas. The key element that will potentially attract investors to UPL is its low drilling costs. The majority of Ultra’s assets lie within Wyoming’s Pinedale gas fields, which is a relatively cheap place to drill. As well, the company recently reported favorable financial news. In its latest earnings report, UPL beat analysts’ estimates with a profit of $1.36 a share. The Wall Street forecast was for a profit of just$0.49 per share. This gives UPL a P/E ratio of under 7.

Denbury Resources Inc. (NYSE: DNR ): Denbury isn’t your average driller of natural gas. Rather, it is a leading purveyor of enhanced oil recovery drilling techniques. In particular, the main focus of the company is to seek out and purchase older fields from various energy firms (often for scrap prices). The company then uses carbon dioxide injections to help push the remaining oil up through the wellhead. The down side to carbon dioxide injections is the heavy cost affiliated with them. However, even given low oil prices and heavy costs, Denbury has still managed to be profitable. It currently trades at a P/E ratio of 8. The really attractive quality of this company is how its operations have managed to generate healthy cash flow, which has in turn allowed DNR to pay a decent 2.9% dividend. Moreover, in the long run, investors can expect a lot of energy stocks to sell of their assets to say afloat, which DNR should be able to pick up on the cheap and add to its list of long-life assets.

Disclaimer: This article was posted with the permission of a third-party contributor and the opinions contained therein do not necessarily reflect those of SmallCapPower. SmallCapPower does not endorse any investment advice provided by these third-party contributors.

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